The Spanish companies will bear record tax pressure next year, when the economy is expected to register a sharp slowdown caused by the consequences of the war in Ukraine and the energy crisis. The Institute of Economic Studies (IEE) denounces, specifically, that this higher tax burden on the productive fabric it will reach 11% in 2023, so it will be above pre-pandemic levels (it was 10.3% in 2019) and one point above what their counterparts in the European Union (EU) will bear on average.
In its report on the evaluation of the General State Budgets, the employers’ study service lowers GDP growth to 1.2% next year. It is a forecast that is more in line with that published by the International Monetary Fund or the Bank of Spain and that is nine tenths below that forecast by the Executive in the public accounts. Furthermore, they consider that there are “clearly downside risks” that could make even this calculation not be fulfilled.
They also stress that the Spanish economy is in a situation of vulnerability due to the high level of deficit and public debt (these variables will end the year at 115.2% and -5% of GDP, respectively) and warn that the situation in terms of structural deficit is even worse (it is above -4% of GDP).
Budgets that add fuel to inflation
From the IEE they consider that the PGE reinforce the inflationary dynamics of the Spanish economy, since some of the items of current expenditure that have the greatest contribution to the growth of what was budgeted in 2023 (pensions and salaries of civil servants) are indexed to the evolution of inflation this year. This translates, not only a need for higher future income, but also puts more pressure on the CPI through the effects of the second round and “reduces the effectiveness of the measures adopted to contain prices,” they say.
Budgeted tax revenues for 2023, amounting to 262,781 million euros, are the highest in the history of Spain and exceed the figures for 2019 by almost 50,000 million euros. Revenue increases more than twice as much as nominal GDP (23.4% compared to the 11.5% rise in activity since 2019), which implies a very significant increase in tax pressure, reaching 42.1% this year and standing at 42.3 % already facing the next.
Businesses bear the brunt of the tax hike
The collection goes up in all the main taxes. In IRPF they foresee a rise of 7.7% and in VAT of 5.9%. However, from the CEOE studies service they warn that, taking into account the fiscal measures announced for 2023, companies bear most of the tax increase. Three quarters of the total will fall on them, 4,235 million. Thus, in a context of economic slowdown, they consider it a mistake to add even more burdens to companies, which in their opinion entails a very worrying loss of competitiveness.
“Tax increases seeking collection in the short term, without a sufficient prior evaluation of their effects, deviate from the design of an optimal tax system, which favors economic growth, at the height of the seriousness of our situation”, they point out in your document. For all these reasons, the IEE considers that these accounts are not suitable for Spain at a time of economic slowdown and the tightening of financial conditions, in which the focus should be on budgetary consolidation via the efficiency of public spending.
They regret that Spain, which continues to be one of the European countries whose public sector has further delay in the process of fiscal consolidation, it also has a higher structural deficit and is among the most indebted in the European Union. With record highs in spending and revenue (due to rising inflation), they believe that this imbalance is barely being redirected and, in fact, they denounce a lack of strategy for consolidating public accounts in the medium and long term.